SC35: Why this 7 figure seller started sourcing products from the US instead of China

Norm Lanier has been selling on Amazon since 2011 and on his own ecommerce stores even longer than that, so in this episode you'll hear from someone who has been selling physical products for over a decade.

Norm had a lot of unique insights to share in this episode but one of the things that stuck out is why he started shifting his sourcing from China to the US. Listen to all that and more in today's episode.

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Get involved and ask a question about selling on Amazon and Chris may answer your question live on a future episode of Sellercast. Also, if you think you'd be a good guest for the Sellercast podcast feel free to tell us more about you and your company here.

Podcast Transcript

We actually met up in person in various events. We’ve had some meals together. And so it’s a lot of fun to actually bring him onto the show and talk about what he’s done in his business and how he’s been focusing and shifting his focus specifically on how he’s sourcing products, which I think is going to be of particular interest to you because it’s a strategy that no one else has mentioned in previous episodes. So I think you’re going to like that part.

And the other thing too I want to mention is if you’ve been enjoying this show so far and you like, I would really appreciate it if you leave us a review. You can go to Sellercast.com/itunes.

At the time of this recording, we have less than 100 reviews. It pains me to say that because I feel like it’s been a fun show. I’ve really enjoyed talking to people that have been on the show. And also, I’ve been getting great comments from people that I meet at various events, and also, just through emails.

So, if you’ve been enjoying the show, please leave a review. I’d really appreciate it. And you can do that at Sellercast.com/itunes.

Alright! Let’s go ahead and start the recording. And hopefully, you enjoy this episode with Norm.

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Chris Guthrie: Hello, everyone. Chris Guthrie here. I’m excited today because we have a friend of mine Norm Lanier on. Thank you so much for coming.

Norm: Oh, it’s great to be here, Chris.

Chris: Yes, I know we’ve met at multiple events and had some Mexican food last time I think. And there were lots of events that we’ve seen each other. And so I’m excited to talk about your business, your ecommerce business.

Norm: Yeah. It’s a pleasure being here. It’s always fun meeting up with you at different events and meeting people in person.

Chris: Yeah, yeah. So let’s dive into it. I know you’ve been around selling physical products, ecommerce businesses for quite some time. How long have you been selling on Amazon for?

Norm: Amazon, a little over five years now.

Chris: So, you got in well ahead of—I’d like to think of just all the different courses that have really come about over the last two years. It’s just a general interest in people that are using it as a business model, or at least a launching off point for their business. So five years now.

So, were you selling on other platforms before that? Or was Amazon the first one that you went to?

Norm: No. Actually, I had an ecommerce presence in one way or another since way back in 2004, back in the stone age and Internet years. And then, I started building ecommerce businesses on the side while I had a real job and started building those businesses up and got to the point where I was making more money on the side jobs than I was on the real job.

And about the same time that I got on Amazon is when I went and started doing this full-time. Amazon started for me really as just another channel to sell the products that were pre-existing. I was a little bit leery. I really dipped my toe in really slow to the Amazon market because my concern initially was the fact that I might be…

Chris: Cannibalizing your sales…

Norm: …cannibalizing my sales. But what I soon realized is that people that were searching on Google and people that were searching on Amazon were really two different customers.

What I started to notice too probably three or four years ago was that ecom businesses, ecom stores that are on your own sites, the traffic started to shift away from that. And I think more and more people have just moved to starting on Amazon as their search engine for physical goods.

It worked out well for me because same as I was going up, the other site traffic was going down. And we still do considerable traffic there, but we definitely see a decline there. The cost of acquiring customers and everything else has just continued to go up. Amazon has been a great channel for us.

Chris: What do you see as your split now? Are you able to see the split on the way your business looks now for your own ecommerce stores and then on Amazon?

Norm: Yeah, Amazon has grown so quickly for us. It’s a little bit of an unfair comparison just from the fact that my ecom stores are very niche-specific, whereas in Amazon, I have broadened out quite a bit into multiple categories. It’s a little bit unfair. Probably, it’s got to be 80% Amazon now probably.

Chris: I was curious if it was going to be…

Norm: Yeah, it’s pretty dramatic.

Chris: That’s interesting. Now, going back to your earlier comment about just seeing the shift, do you think it was just also changes in Google’s algorithm. I know that we’re primarily getting traffic through search engine optimization. Or are you driving PPC for your niche ecommerce stores once you started to see the shift in traffic?

Norm: It was both. We did SEO. And SEO used to be really simple. It really was not rocket science. You had a few things you needed to do. Google rewarded you for it. And then, a few years later, Google started punishing you for the same thing they were rewarding you for.

We ramped up PPC. And PPC has always been a factor in our ecom sites. But the particular niche that I’m in got really competitive. We kind of owned that market initially. And then, it got really competitive with some people that were doing some pretty sleazy stuff. I wasn’t going to go down that path and compromise my integrity—the kind of promises they were making and so forth.

So, we got to the point where PPC, we were spending as much to acquire customers what they were spending in it. It just made no sense. It was a very tough pill to swallow because you keep thinking, “Well, I just need to tweak it. I just need to make an adjustment.” And at some point, I just said, “This just isn’t making any sense,” and we just turned PPC off completely for that ecom store.

And it still does $10,000 to $15,000 a month. So it’s not like it’s nothing. But it doesn’t do the volume that it used to. As I’ve said, we were fortunate that we found Amazon as a channel, a really good channel for us. We have expanded a lot there. It really ramped things up.

Chris: Just by the way that you said it, it sounded like, already, it was sort of a competitive space. I think a lot of times, people think, okay, I come into Amazon, they start doing really well, and they end up just staying there (which some people do really well just doing that). But then they also think, “Okay, I’m on Amazon. I want to spread my wings and get into other platforms.”

Do you think that it really just depends on a niche that it makes sense to even bother going for an external store?

Norm: I think what’s more of a factor there is that you have to be set up. I think that there are a lot of people that think from near beginning that they need to have a presence off of Amazon. And look, I’m like everybody else. I would love to spread the wealth and not have such a dominant presence on Amazon. But the reality is that getting traffic to an ecom store is not easy, it’s not cheap. There’s a cost to it. Most people forget about that when they think about doing an ecom store.

The other factor is that to have an ecom store that doesn’t look just absolutely pathetic, you need to have 10 to 20 products that are all related in some way. You can’t just have one or two products and throw up an ecom store and think that people are going to come to that and go, “Oh, wow! This is amazing.” You really need to be really invested deeply in a niche or you just need to go a different direction with Amazon.

Chris: Yeah, that makes sense. I was interested in your perspective since you came from ecommerce outside of Amazon, then onto Amazon, and just kind of seeing how that looks to you for people that are thinking about trying to diversify as well.

Norm: I mean, it’s great in theory. It’s a lot harder I practice. I think people gloss over a lot of the work that’s required to get people to an ecom store.

Chris: Yeah, most of the people I know that are doing well with external ecommerce stores, they’re driving most of their traffic through pay-per-click, and then they’re usually using newer advertising channels—well, relatively newer like Pinterest and Instagram, and those channels that people haven’t yet figured out.

And so, any time a new channel opens up like that—which should be a nugget for anyone listening—if you can really get into a new advertising channel and just spend a lot of money to figure it out, and you figure it out early, then you can do really well.

I know that people did really, really well back when Facebook first came out with their—I can’t remember what they used to call it, but their first advertising platform.

Norm: Yeah. The other place that I see a difference for that too which a guy shouldn't discount is if you’re selling a consumable, if you’re doing supplements or something else, make-up or any of those sort of things. If you can sell on your own channel, typically have profit margins. You can spend a lot more to acquire customers because they’re going to be coming back. If your product is decent, they’re going to be coming back. So you can afford to spend a lot more.

Whereas if you’re selling dog brushes, that’s not a repeat customer. Someone that buys one every four or five years, that’s not a repeat customer—not in my mind anyway.

Chris: Yeah, that’s good insight.

Okay. So then, are you right now only selling private label products or are you also reselling products as well?

Norm: Yeah, I’ve come the full gamut. I’ve tried everything but arbitrage. As far as Amazon is concerned, I’ve started selling some of my products, then I said, “Oh, that’s pretty interesting. Let me try selling other people’s products at wholesale.” And then, we started doing bundling, and eventually moved into private label.

As far as what I’m doing now at this moment, I’m 100% private label. But I’m kind of looking at wholesale again. I’ve got some new tools and so forth that make an interesting thing. I’m not sure if it will play out to any large capacity or anything, but not having to deal with shipments from overseas and long delay times and just being able to turn money over quickly—obviously, margins are a lot lower when you’re doing wholesale. But there’s something to be said for turning over quick inventory that you don’t have to own.

Chris: Yeah, yeah. And that’s interesting. Obviously, if you can make it work and you have some sort of a tool that helps you in a unique way, that’s better than what other people might have access to and that’s great. Is that something that you developed in-house?

Norm: No, it’s an outside tool that’s available.

Chris: Okay. So then what about just your long-term goals to your business? I don’t think you mentioned—are you comfortable sharing roughly what your revenue numbers are for your business now?

Norm: Oh, yeah. We’re well into six figures a month. And it’s continuing to grow. It’s actually even surprising to me how it continues to grow. We’ve really done a hockey stick.

We made a real hard push last year to ramp up the number of offerings of the products that we had. And the reality is, on Amazon, for the most part, especially when you have a lot of items, and you can’t just spend 100% of your time focused on one particular item—it does take time to build reviews and rankings and those sorts of things. But I always stay away from anything that’s trendy or sexy or any of those sort of things. I like evergreen products that are really boring.

Chris: Yeah, it’s been a similar thing with some past guests. They’ve done a similar strategy. I mean, I don’t necessarily say that you can’t do it either way, but I think that your reasoning, of course, is you want to be able to just have something that lasts as long as possible. I don’t know if that makes sense.

So then, are you in a growth mode now where you’re trying to still add more products? You mentioned you did that last year, you started adding a lot more. Are you still planning to add even more in 2016?

Norm: Yeah, we are adding more products, but my focus has shifted a little bit. Everything was imported from China, private label, with our branding and modifications and colors and those sorts of things. But the focus has shifted a little bit more towards U.S. manufacturers.

You certainly can make the argument that it’s more expensive to do that, but by the same token, your MOQs are a lot lower typically and the turnaround times can be a lot shorter also. So, those are some things that I’m really liking right now.

Chris: Yeah, I mean if you have those lower parts, then you can presumably just send them FBA labels to have them ship your package through UPS.

Norm: Yeah, absolutely. And that’s one of the things that we’re doing. We’ve got several products that we’ve just never even touch. We just send them an order and a credit card number, a shipping label from Amazon, and that’s it.

Chris: Oh, that’s cool. How do you find those suppliers and your U.S.-based people? Have you got a U.S. website that finds suppliers or you google whatever the product is you’re interested in and you ask a supplier?

Norm: Yeah, that’s pretty much been the case. We have some products in mind. We’ve done some trade shows. We went to the International Houseware Tradeshow in Chicago. We found some new vendors there. We’ve started working with them. And so that was one way that we found them.

And then, of course, Google searches and so forth for wholesale or private label or things like that in whatever niche product that you’ve got.

Chris: I like that. I really like, that tip on the idea of maybe going U.S. can make sense especially since—in a lot of cases, you’re just starting out. You don’t have a lot of money to do the huge MOQs anyway. And part of it is you’re trying to get that inventory in and they’ll last long enough through all your promotion efforts until your next order comes in. And that can be a stressful time because if you’re out too long, then you’ve got to re-promote the product. But with the U.S., you solve those problems.

Norm: And the MOQs and long lead times, really, we ran into this problem seriously beginning of last year when we were ramping up things. We ran into a cashflow problem.

Fortunately, I’ve been in business for quite a while. I had a good track record with my bank and everything. We were able to get a line of credit that gave us that cushion that we needed to get the inventory quantities that we really needed because we were running into a situation where we were basically just running out all the time because we didn’t have the cash to buy in the quantities that we needed to to keep inventory.

Chris: Okay! So then the other thing I wanted to ask you is you mentioned several times now “we” in reference to your business. What does your team look like now? How do they help in your business?

I think a lot of times, people are trying to figure out what that first hire might look like. And it’s tough to really know where to best put them?

Norm: Well, for me, the first hire, because like I said, I was building businesses on the side while I still had a real job. The first hire for me was someone to handle the customer service. I found her on oDesk which is now Upwork. At that point in time, I couldn't return phone calls. So what I wanted her to do was to get the customer information and basically dictate the phone calls that we got and send that to me, and I could respond by email while I was at work.

And then, I come to find out that she’s really quite capable here in the U.S. I started giving her more and more tasks. She’s been working with me for six years, just under six years.

And the really funny thing—although this is going to change this summer—is I’ve actually never met her in person. She lives in Oregon. I live in Texas. I’ve invited her out for some trade shows and stuff. She’s a widow, she lives by herself on a farm. She can’t leave because of her animals and so forth.

But anyway, we’re headed up there this year. We’re going to actually meet for the first time face-to-face. But of course, we talk every day, multiple times a day on the phone and the messaging system and so forth.

And then I’ve got another lady that works for me who handles all of my production stuff. She’s really great. I’ve turned over basically all of the ordering. We used some software to help us maintain our inventory. I’ve given her free range. She has her own business credit card and everything. She handles all of the ordering and everything.

And I told both these employees, I’m not a micromanager. My scope is really big and broad. It’s worked to my advantage that I don’t nit-pick things to death. I’m not a real detail person, so I tend to just dump stuff out there really quick, and then I’ll go back and correct spelling errors and everything else when my staff points them out to me.

And for me to get stuff, when I get an idea, I’m on it quick and I’ll get it out as quick as I can and I’ll worry about the details afterwards because it’s not all written in stone. And I told both employees when they started, I said, “You all are adults, you need to make adult decisions. And if you screw up, that’s okay. We’ll just learn from that. You all better know how to run the business because if I drop dead tomorrow, you all need to keep it going.”

And I think so many people get trapped. They create another job for themselves. That was just never my goal. I don’t really have much of a schedule as far as what I do on a day-to-day basis. It’s just dependent on what I need to do. And then, after that, it’s what I want to do and what I feel like pursuing. And sometimes, that’s working on new products, and sometimes it’s just listening to podcasts and find out what other people are doing because you never know what other ideas are going to come from.

Chris: Yeah, yeah. I think that continued learning is so important in any business, especially that’s an Internet-based business because so much can change quickly. We laughed about you saying 2004 being so long ago. And it’s true! Everything is completely different than that time, and it continues to change.

So then, your two team members. Do you have other people that help out as well or is it primarily those two?

Norm: No, that’s it. Although we outsource things now. We just started working with a company that’s doing prep work for us now. We have some vendors that we use on the outside that do some product customizations for us and so forth.

Two employees is good. I mean, I won’t say that I’ll never have a need to hire someone else. But right now, two is good. And if the model of outsourcing works okay, then I’m going to continue to pursue that. The cost are probably a little bit higher to do that, but it’s one less employee I would hate to have to let anybody go because we didn’t have enough going on or things changed or whatever.

Chris: So, let’s talk about some of the mistakes that you’ve made in your business. I know how long you have been in business. There’s probably a lot that you could chose from. But if we narrow the window down to the more recent time period with even primarily driving your sales through Amazon, what do you think are some of the biggest mistakes that have come from that?

I know you mentioned one earlier with the cash flow issue. But maybe one thing would be just to not launch too many products too quickly. Is that going to be one of the things?

Norm: No, I don’t really even see that as a mistake. It just created a hurdle. And realistically, if you’re pushing hard, you’re just going to create more unforeseen problems that you just really aren’t anticipating.

I think, for me, hindsight being 20/20, I definitely would’ve ramped things up on Amazon a lot quicker than I did. Part of it was when I got on Amazon—ASM may have existed, but I didn’t know about it. I didn’t know about it until they launched the third version or the third launch for them.

So, I was just figuring all these out on my own. And back then, there weren’t hundreds of Facebook groups where everybody was talking about doing this and stuff. I figured all these stuff out by just sitting on Amazon and looking at what people were doing.

And I ran across one product, I remember, which was a UV flashlight that a guy was selling. I saw amazing pictures. I saw the long titles, keywords in it. I wish that I could ramp things up as far as private label and that sort of thing faster. I didn’t have the confidence at that point in time and I was going after really, really narrow niches because I just didn’t think I had the skills to compete against the highly competitive arenas.

Chris: So really, just the ramping up part then. Okay! So then what about your launching process? You’re launching a lot of products now, and you’re doing it primarily with a U.S. focus. What are you doing with your launch strategies? Because you have so many diverse products, are you able to use your own traffic sources to help drive some sales that way or are you just using typical launch platforms that a lot of people are doing?

Norm: Yeah, there are a couple of different approaches—one of the niches that has been my ecom site. And that’s certainly an advantage of having an ecom site, being able to gather all of the customer information and so forth.

So I have a mailing list in one of my niches which has got over 7000 people in it. So when we launch any product to that niche, we can throw a 30% coupon and whatever out there, and we can get instant traffic to our thing. And with a list that big, we can actually segment it down, so that we only send out 1000 emails at a time, and break that out over several days so that we can keep a steady flow of sales coming in and we can send them with specific links and everything else to the product that we’re launching. So that’s one strategy.

But outside of that niche, I have always viewed getting reviews and these sort of things as just priming the pump. What I like to do is I like to get in the neighborhood of, say, five to ten reviews on a product, then I’m pretty much done with it. Realistically, as far as offering coupons or anything like that just to get reviews, that’s one of the things why I’ve had very few reviews deleted. It’s because I haven’t gone this route of using review clubs or things like this to any great extent.

We use the Tomoson service for getting in contact with the bloggers. We’ll do a handful of products to them. And for most of our products, we don’t do a huge amount of effort to really spike a large number of reviews.

Now, one thing that I’ve done since the beginning—and I always ask the question why and I’m always willing to throw some money at something to see just what happens.

The strategy that used to be quite common going around was that you didn’t start doing sponsored ads on Amazon until you had 10 or 15 reviews or something like that. To me, I always wandered why and I started throwing money at it.

Yeah, you’ll spend more money to acquire more customers when you don’t have any reviews, but the whole point for me to get sales and to get some reviews. And those are real organic buyers that you’re getting when you do that. So, from day one on any product that I launch, I start running ads immediately.

Chris: Interesting! Just yesterday before as well, we were talking about waiting and then doing the promotion. Interesting…

Norm: To me, it’s just like you’re spending money to send a free product to a reviewer to get a review or something. Well, why not spend that same amount of money on ads. And if you can generate an organic sale in a review from that same spend, then to me, that’s a much cleaner, safer way to go because Amazon is never going to penalize you for spending money with them.

Chris: Yeah. Yeah, that makes sense.

Well, I guess, we’re close to wrapping up. Maybe we can just close it up by saying are there any other strategies or tactics that you’ve seen kind of like that last one that you think people perpetuate in Facebook groups—know that you’re in a lot of them as well—that you would just say in your opinion isn’t something you’d suggest people doing or if there’s maybe a couple of strategies?

Norm: Well, for me, one of my key strategies has been to really go after boring stuff that people buy on Amazon every day. To me, there are a lot of advantages to doing this. One is it’s a lot easier to rank. Usually, there’s not a whole lot of competition. You’re usually competing with people that are fairly unsophisticated. So it’s easy to create a really compelling listing with great photographs, great bullets, great title and so forth.

And then, on the backend of that is if you are doing sponsored ads, you’re not paying a fortune for those keywords because there’s only so many keywords to go around. And if you’re in a highly competitive niche, then you’re going to get into a situation where you’re bidding against a whole lot of other people that don’t mind losing money and it gets very expensive to drive ads that way.

And there’s a lot of money to be made in really boring stuff. People tend to go after the shiny objects, the things that they would want to brag to their friends about that they’re selling and stuff. Nobody wants to brag about selling clothespins. But I can guarantee you that there are thousands of orders probably for clothespins on Amazon on a daily basis. Just things like that, they’re not sexy.

And to me, it’s all about adding another rung to the ladder. It’s not going to get you very far. But each new product that you’ve got out there that does three or four sales a day, a few hundred dollars a month, hopefully a thousand dollars plus a month, it all adds up.

The other thing is just going broad with the number of products that you have. Get your stuff out there. Get your listings up. And you hear these situations all the time where they love to make poster children out of people that have three products and they’re doing a million dollars a year on Amazon. Well, that scares the jivvers out of me, something like that because the market is going to shift, competition.

But you know what? With me, I’ve got a lot of variations, but I’ve probably got over 150 SKUs. And if I run out of a product, I don’t really notice it in my day-to-day income because it’s a small piece of the pie. But all those little pieces adds up and it gives you diversification into different niches, different categories. And if you have a problem in one, you don’t lose 30% of your business overnight if the supplier has a problem and can’t ship for three months.

Chris: Yeah, I love it. Norm, I think that’s a great way to close it up. Thank you so much for coming on the show. I really appreciate it.

Norm: Absolutely! It’s been a pleasure.

Chris: Alright! That was the episode with Norm. I want to thank him again for coming onto the show. You can also go to his website, PrivateLabelChecklist.com, to get a better sense of the types of products he goes with.

I want to thank you again for listening to the whole episode. Hopefully, you’ve enjoyed it. I really enjoyed doing these podcasts because it’s a lot of fun talking to other entrepreneurs that have built successful ecommerce business, whether they’re early stage, late stage, middle stage. Wherever it is, as long as they have great advice for you, you can take some of those tips and apply it to your business.

So, thank you so much for tuning in. We’ll see you in the next episode.